teisipäev, juuli 17, 2007

A War Over Capital, Not Capitals

People have been turning the furniture upside down in their apartments trying to figure out the deterioration in relations between Moscow and London. We all know the story, Alexander Litvinenko, ex-KGB, became British citizen in the company of the fraudulent and much loathed Boris Berezovsky, then was poisoned last year by a rare radioactive element in a London restaurant, and the radioactive substance left traces everywhere one Andrei Lugovoi (in the pinstripe on the left), also former KGB, went on his trip back to Moscow.

Like any media phenomenon this one is getting increasingly difficult to follow and it must be taken in proper context. Some believe that that context is unwarranted NATO expansion, which aroused the iracity of 'the bear'. Others think the breakdown in East-West relations has something to do with a missile shield in Poland and the Czech Republic, put there ostensibly to give NATO partners the same protection as other (American) members of the alliance.

I think that one sliver of truth in this mosaic is contained in the following Bloomberg article:

The U.K., which is the largest foreign investor in Russia, could find that British companies are barred from major new energy projects, said Lukyanov. BP Plc's Russian joint venture is the third-largest oil producer in Russia and last month had to surrender control of the giant Kovykta gas field to state gas monopoly OAO Gazprom.
So the UK has some pretty strong tentacles that reach deep into the heart of the Russian market. And a nationalist leader, like Vladimir Putin, perhaps wishes to shake the tree, get that capital to flea, and to establish state-owned control -- through Gazprom or its subsidiaries -- over market areas where British firms are currently established.

This reminds me of some of the cockier comments that Ansip made this spring. One -- made to journalists during the Pronksöö, was that he did not fear sanctions because Estonia's major trading partners are Sweden and Finland. The other -- made at the Reform Party meeting -- was that the less Russian capital in Estonia, the better for Estonian security. While sounding bitterly provincial, he was also probably right.

Some Russian analysts, discussing the future of Russia's relationship with its favorite Baltic state, Latvia, basically supported this economic view of influence.

I think that Russia will not be of first importance to Latvia’s foreign policy, in spite of the fact that Latvia depends on Russia economically ... However, if Russia builds up its relations with Latvia preventing the neighbor from making unfavorable moves to it, Russia can influence that country. If Russia continues reacting to such steps too slowly, as it does now, its position will remain as weak as it was when the “Bronze Soldier” monument was removed in Estonia.
There you have it. Capital equals influence. In another Russian analytical piece that came out this weak, similar ideas were expressed in dealing with Georgia. In his piece, Aleksey Pilko argues that Russia should abandon the separatist movements in South Ossetia and Abkhazia in order to build a Russian-friendly elite in Georgia that will "mean greater Russian influence in the wider Caucasus, which can only lead to enhanced security on Russia’s southern border."

Given that these ideas are being churned out by Russian strategists, perhaps it is time to argue less about extradition law in the Lugovoi affair, and move onto what is really being reconsidered in Russia over who owns what. Stalin's Russia tried to make the USSR free of 'troublesome' minorities. Putin's Russia it appears is trying to make the Russian Federation free of 'troublesome' capital.

13 kommentaari:

margus ütles ...

I don't think money=power in Russia. It might be somewhat true in European democracies where we have rule of law.

British Petroleum invested a lot of money in Russia but then Putin changed his plans and simply mugged them. You don't really 'have' anything in Russia when you're on the government's black list. You can be evicted from your apartment in Moscow when the mayor 'needs' another lot to build on.

So in Russia money is just a measure of one's power whereas in a liberal democracy it has a value in itself.

I feel I've left something out.

Wahur ütles ...

So we have discussed Nashi=Hitlerjugend parallel, still unmentioned goes recent prohibition of books, backing off from disarmament treaty reminds certain moves that Hitler made. So whats next? Should we start lookin for modern "Polish corridor"?
I still think not, even if position of Kaliningrad/Königsberg is so tempting. Military conflict most probably would not happen, unless Russia get a leader, who is as nuts as Hitler was. Currently I still think (or hope) this is not the case. Or maybe the time is simply not right, yet.
Because if half of gloomy predictions about world oil resources (and therefore, oil prices) are true, then approximately next 50 years might make Russia more powerful than it ever was. There is not a slightest doubt, that this power will be used to win back what was lost, whether (or maybe, first,) creating economic dependants, then, if the time finally is right, by the force of weapon.
I guess what we see now is opening moves in that game, where resources are centralised, to make them more directly usable for further maneuvers. If we think about cooperating with French on Štokman gas, there is also possible side-effect of cooling EU allies relationships.

plasma-jack ütles ...

Kadyrov has recently made some interesting comments. Whoever Putin appoints, he might have serious trouble dealing with this vassal. Int this context it's not totally irrelevant that, according to an opinion poll, some 6% of Caucasus residents think that the new president should appoint mr K as a prime minister of Russia as a guarantor of preserving Putin's policy (:

LPR ütles ...

Several large Russian gas and telecom companies have recently delisted their sponsored ADRs (shares) from trading on NYSE and NASDAQ. More to follow suit. Next up is probably Rostelecom (ROS).

The SEC filings do not disclose the political reasons for that of course, but one can imagine.

Investing in Russia is like a drunken fistfight without any rules. Even the best heavyweights can get their noses bloodied.

The press conference Gasprom and BP officials gave was not unlike one of these videos where you see kidnap victims praise their captors. Since my money was not involved, I found it funny and pathetic.

Giustino ütles ...

What do you think of these stories being floated about Russia 'pulling out' economically from Estonia by building its own ports, et cetera, as 'punishment' for moving the statue?

Will these efforts be as successful as the relocation program? From what I understand there are about 335,000-340,000 people of Russian descent in Estonia today. And according to the Russian Embassy in Tallinn, *70* of them have shown up requesting to be part of the resettlement program.

Estonia in World Media (Rus) ütles ...

I believe there's no context. Litvinenko, FSB official, accused FSB (Putin) of staging 1999 explosions, which turned Russian public opinion at once and became cornerstone of Putin's suppor among the people, justifying his doings. Litvinenko had to die. Only piece that looks strange is chalenging way of his murder, but this is Russia.

Wahur ütles ...

They may be pulling out. Problem is, their own alternatives are not very good. Excellent example is famous Ust-Luga port that they use constantly for threatening Balts.

Trick is, Ust-Luga has been built for about 10 years and it is still not operating, due to problems like sand constantly filling the aquatorium it might never become operating, at least if economic reasoning rules. Other grand port projects in Finnish gulf do little (but only little) better.

Therefore I cannot understand Severstal move - on one hand it will make it easier to squeeze Estonian transit at will. On the other hand there is no excessive export capacity to replace it, so any such squeeze has not only Estonian, but also Russian balls between the vise.

This is why my previous post was so gloomy - they need good ports in Baltic sea badly and they have not been able to build their own to replace lost Baltic ports. It must be making them pretty mad.

LPR ütles ...

"Pulling out" of Estonia sounds very illogical. But Russia is an enigma wrapped in mystery, as usual. We know how they manage to act against their own best interest.

If I was Putin, I'd increase Russian economic takeover of the Baltics not curtail it. Unless ...

And that my friends, is one very scary 'unless'.

Think of Hitler calling back germans in the eve of the WWII.

These developments are very interesting to follow. Books will be written about it one day.

So take good notes. :-)

Giustino ütles ...

This is why my previous post was so gloomy - they need good ports in Baltic sea badly and they have not been able to build their own to replace lost Baltic ports. It must be making them pretty mad.

Primakov brought up Sillamäe in his 'op-ed' about Estonia. I think they like that port more than Tallinn. The architecture reminds them of home.

Wahur ütles ...

They would consider Sillamäe as bonus, or maybe as an interest - its built in post-Soviet period so it never was theirs ;)

margus ütles ...


Russians are 'mysterious' in the same way as women are 'mysterious': they have different sets of values. When a typical European mainly wants to have a better life than the neighbor then a Russian's most common status grievance is to be 'feared'. And it doesn't matter if the others actually have 'fear' or if his actions might work against him when considered on a longer timescale. (not saying that women are like Russians, of course. Or that all Russians are alike.)

Also, being 'illogical' can be a planned or subconscious form of coercion.

Giustino ütles ...

The Russians still don't 'get' Estonia. They are still swimming in Stalinist nonsense, like.

1) Estonia 'willingly' joined USSR in 1940 and

2) Estonians are Nazis.

They (basically) don't recognize the current Estonian government, that is, the government of 1918.

It was such a big deal for them just to sit down and sign a friggin' border agreement.

They are still holding out for the government of 1991 (Savisaar). By the way, ever notice that Savisaar doesn't show up for the independence day gala? Hmm. How interesting.

So, they don't 'get' how they can have such great relations with Gyurscany in Hungary, but they are loathed in Estonia.

They would learn a lot if they looked at one simple photo from 1920.

nipi ütles ...

I think we should look more on the development of the Gas Pipe under Baltics. Jokingly said, easiest way to handle it could be to join the borders of Germany and Russia like Hitler and Stalin did. Then there are no neighbours in between who may disturb their business.
At the moment it seems still rather unlikely, that all sea-states of Baltics can accept the pipe, a lot of time takes the environmental assessment of risks. Too high is the uncontrollability of armed forces on the sea related to the protection of pipeline.
But finally, looking to the opinions on the treaty with France, Russia lacks capital. Also, EBRD is not willing to lend it if not all member states of EBRD will not accept the construction. What is actual situation there? Are russians with germans together still able to fund the pipeline without acceptance of all Baltics? Even Sweden is not sure on the environmental safety. We fear more the military safety. But environmental as well.
Building the pipe in our economic zone? Finland is proposing that as the seabed in Finnish zone was said too complicated. No answer yet from here.
For interested parties, some materials available on website www.envir.ee on the impact assessment. As far as I know, Estonian navy experts have said they think the investment plan lays on very unsafe area.